Five years ago, social media was only just beginning to show its potential to the market.  Although many of us had been blogging for some time, small businesses had yet to see the opportunity that exists in blogging or social media in general.  Even today, most small businesses are so focused on day to day operations that they miss out on the opportunities of engaging with social media.  Those that had websites felt that their web presence didn’t do much for them other than serve as a virtual brochure.  For many, this is still the case, and still more don’t even have websites.  In 2006 I conducted some research into the activity provider segment and found that only about 20% of operators had websites, yet almost all of them print rack cards and brochures.  My sense is that this is still the case for many of them.

I did learn recently however, through some research that will be made public in early 2011, that the tour and activity segment faired better than all other travel segments in 2009.  While much of the travel industry contracted by almost 9%, the tour and activity segment contracted by only about 3%.  This is the benefit of a segment powered almost entirely by small and micro enterprises.  These are businesses run by entrepreneurs and proprietors who can make decisions quickly, adapt to opportunities, and reduce their costs by being frugal.  Small businesses, in times of crisis, can find revenue opportunities is quite different ways.  A growing number of operators have already used services like Groupon to fill empty seats or sell excess revenue.

Working with small business is never easy, but it can be incredibly fulfilling.  Unlike working with large corporations, small businesses are generally an extension of the owner.  When you work with a small business, you are working with a person who can make decisions, cares deeply about their business, and is looking for technology partners for the long term.

In keeping with the spirit of empowering small businesses, I decided to extend my Savvy Operator project.  I recently set up a community using Ning to provide a place for tour and activity operators to share and learn together.  The inspiration for this came from Alex Bainbridge’s Small Fish Big Ocean community which he has been running successful for several years.  In the same way that Alex has brought small niche travel agents and specialty tour operators together, I hope to bring in-destination tour and activity providers together.  If you are a DMO or an organization that works with a number of activity providers, I hope you’ll consider getting involved.  The biggest lesson I have learned over the years of working with small business, is that they are eager to learn.  Hopefully we can help them all become Savvy Operators this coming year.

Afar is also a revenue engine for local businesses by allowing them to create profiles on the network and share with members. The local businesses get access to a wide variety of demographic and statiscal information not available on other social networks.

When asked how the site handles the many personas that travelers have, Orum answered that travelers can change their personas on the fly.  The question then becomes whether this this skew the demographic data that Afar claims it provides to business partners.

T4 Review: Another social network? I’m not sure joining another social network is going to be palatable to travelers. I think the big challenge for Afar Connect will be to build user acquisition.  Although there is integration with Facebook, will users want to use both Facebook and Afar Connect or will they just stay on Facebook.

The content is aggregated through searching and crawling.  The sites are curated before they are added to the search engine. Monetization will come from advertising partners who want to target local travelers when they are in the process of searching for things to do in the market.

How will Goby compare to players like Facebook, Gowalla, and Foursquare who are already well established in the marketplace?

T4 Review: I’ve always been a fan of Goby.  The search for local activities and long tail business is an important one and is under represented.  The Goby mobile app is a really nicely executed version of the service and significantly different enough to be seen as unique as opposed to a rehash of the website.

The Small business registration process is relatively straightforward and allows business owners to become part of the network. The franchise hotel chains allow their individual owners to join the network and participate in GDS distribution.

By partnering exclusively with Travelport, Onerez is hoping to drive incremental revenue for small businesses through traditional distribution channels that they wouldn’t normally get access to.  Onerez works on a standard agency model and takes a commission on booking.  Onerez also generates revenue through a membership fee to be in the network.

Why is using a small business hotel socially responsible? Why should a consumer care?  MacKenzie feels that consumers want to support small business but don’t have access to information about whether hotels are in fact small business or not.  There was, however, no hard data confirming this assumption, so it is still early to tell if consumers in fact care whether being a small business is an important criteria to choosing a travel service.

T4 Review: I like new and interesting ways to promote small businesses.  I would like to the model expand to include in-destination activities and attractions.  I’m not entirely sure if the model is innovative, but it certainly is refreshing.

Why is Rezgo sponsoring this special report? The tour and activity market is a tremendously important segment of the travel industry but, until now, has been largely ignored. When PhoCusWright asked us if we would be interested in being part of this report, I knew we had to do it. We work with tour & activity operators around the World and we know how important in-destination activities are to the traveler. Our frustration is that there has been NO research into this segment by any major research company. I felt we had to sponsor the report, because if we didn’t then how could I expect anyone else to sponsor it?

Why is this report so important? If the results of this report are any where near what I expect, then there will be a massive spot light shone on the in-destination tour & activity sector. As soon as that happens we will see a surge in innovation and interest around the sector. We will also see large OTAs and distributors looking for ways to connect with suppliers in a big way. This will put pressure on application developers to build systems that easily connect to these distribution channels (hopefully using OpenTravel messages). This attention will increase the awareness of tour operators that, if they want to participate in this incredible opportunity, they need to use management systems like Rezgo to better manage their products and distribution, and that, quite simply, is good for business.

How will this report help small business operators? This report is all about small business.  Unlike airlines or chain hotels, the majority of in-destination tour and activity operators are small businesses.  When PhoCusWright estimates the overall value of this sector, that value will reflect the work of thousands of small business entrepreneurs from around the U.S.  Having a report like the “When They Get There (and Why They Go)” will provide these small business entrepreneurs with hard research that can be used to help acquire funding, grow their businesses, or perhaps start a new business.

Won’t the added attention mean more competition for Rezgo? That is a very strong possibility and one I have considered.  But in considering the risks of sponsoring this report, I determined that the long term benefits to the industry and to the tour & activity sector are greater then the potential short term impact caused by an increase in competition.  Besides, my feeling is that by sponsoring this report and showing our support for an initiative as important as this, we will enhance our leadership position within the sector.

Over the coming weeks I will be working hard to engage other like minded entrepreneurs and companies to sponsor this report.  If you are a destination, an aggregator, on-line travel agent, or even a tour & activity supplier, I encourage you to review the report details and consider sponsoring this report as well.

What I found most interesting about presenting in Finland, a country I had never been to, was just how similar my experiences were to theirs in terms of working with small tourism businesses.  The internal & industry research that we gathered during our beta development was almost identical to the research that the LEO group and the academics in the Lapland had gathered.  It seems that the same SME tour operator anatomy exists all over the World:

• The majority of SME tour operator businesses are single owner/operators.
• Most of the owner/operators come from a guiding or experience background.  They love the outdoors or they are passionate about their chosen are of expertise (i.e. kayaking, river rafting, skiing, etc.)
• The operators don’t have a formal business background and so they tend to lack the underlying foundational business knowledge and concepts.
• Most of the businesses lack formalized best practices or documented business processes.
• The businesses generally have little or no access to capital for technology.

It may seem odd to invite a technologist to speak when the theme is about the experience economy, but actually, it makes a lot of sense.  I believe the reason for having me participate was to demonstrate how small tourism businesses can use leading edge web technologies and on-line tour operator software to sell their experiences around the World.  How else is that snowmobile tour operator going to attract the customers they need to make their business viable for the long term.  Well, traditionally, they would have relied on the efforts of the local destination marketing organization to help drive visitors to the region.  With the increased potential of what I like to refer to as “Supplier Generated Content“, there is immense opportunities for DMOs and other marketers to aggregate, repurpose, and reuse the text, photo, video, geotag, pricing, and availability data that is being created by tour operators for their own marketing purposes in order to drive more visitors and customers.

What is Supplier Generated Content? Quite simply it is all the content created by tour operators that they control in their various content management systems.  In the case of Rezgo, this content includes rich text descriptions, itineraries, experience photos, videos, geotags, pricing, and even real-time availability.  Other supplier generated content may include blog posts, marketing collateral, reviews, presentations, or other materials specifically created by the tour operator.  The key is that the content is created by the provider of the service rather than an intermediary.   The biggest challenge with supplier generated content, however, is that the quality of the content can vary from supplier to supplier.  In my opinion, DMOs and intermediaries need to be focusing on ensuring that, as an experience industry, we encourage and develop the skills required to relay and describe those experiences with the authenticity that can only come from the tour operator who ultimately delivers the experience.

One of the presenters, Pål K. Medhus, is a small tour operator from Norway.   He changed his whole business after implementing the Experience Pyramid, a framework for analyzing, understanding, and enhancing experience based products.  His company, Høve Støtt, has seen tremendous growth and is now considered one of the leading tour operators in Geilo, Norway. Pål attributes this growth to the shift away from a service or product model and to an experience model, like the one developed in part by LEO. If you are interested, you can see the Experience Pyramid on the LEO (English) website, and also read a description of the Elements of a Meaningful Experience. Both are worthwhile and certainly could have a profound effect on how a tour operator envisions their product offering.

In conclusion, I feel strongly that, as an industry, tourism needs to stop focusing so much on the commoditisation of travel and put more focus on developing and delivering superior experiences to visitors. Before we can do that, we need to educate operators in the development of experiences and in the documenting of those of experiences for the purposes of marketing them to visitors. Ultimately, the flight, the hotel stay, and the car rental are only small parts of the overall visitor experience and yet they are the three most readily marketed and purchased travel commodities. By shifting the model and engaging suppliers in the creation of Supplier generated content, destinations can focus on marketing and delivering experiences that are unique to them and desirable to visitors while ensuring that local tour operators are generating the revenue they need to remain viable for the long term.

* Photo Credit: Iisakki Härmä, www.iisakki.com

1. Don’t be afraid to try new things with social media.

Many of the sessions, including the DMO (Destination Marketing Organization) ones included this theme. Social media permeates so many different aspects of the user experience that there is no real standard for how to integrate social media into a strategy.  What seems to be critical however is that it should be done in a way that is authentic, transparent, and increases relevance for the customer.  Creating a Facebook application just for the heck of it, isn’t a good reason.  Makes me ask why so many organizations were jumping into SecondLife?  Not to mention how much they paid for that advice.

2. Destinations must partner with industry to enable stakeholders.

DMOs and other marketing organizations should be looking at industry partners to enable technology rather than trying to build from scratch.  The bottom line is that industry is far more creative and innovative when it comes to the development of technologies.  Why? Because they have to be innovative in order to survive.  DMOs should be leveraging that innovation to enhance their mandates (to market their destinations and stakeholders) instead of becoming technology shops re-creating pre-existing technologies and solutions.

3. Think outside the box when looking for revenue opportunities.

Hotels and airlines should be looking to other segments of the the industry to find revenue opportunities.  For example, hotels could be partnering with local stakeholders to market and sell experiences around their hotels.  Airlines can promote local attractions and tours in order to encourage travelers to book to specific destinations.  Local tour companies can partner with local restaurants and shops to encourage cross pollination of the traveler across multiple businesses.  This kind of cooperation increases the likihood that the traveler will spend money at the destination as well as increase a vendors potential commission revenue.

4. The industry needs to look beyond airfare and hotels.

I always enjoy sitting in on the e-Distribution sessions at these conferences.  The reason why I enjoy them is simple, I enjoy asking the tough question to the panel… “What about the other 95% of tourism business.  How do you propose distributing them?”.  Ofcourse, they never have an answer.  In a room full of PHDs, I would have expected at least one, but alas there was none.  At least this still bodes well for Rezgo.

5. Mobile applications are redefining the destination experience.

I made the conscious decision to travel only with my iPhone to see just how well I could get along with a mobile device.  I have to admit, I had a blast with the iPhone.  Although the high cost of data roaming charges prevented me from using a lot of real-time location services, I did find an abundance of coffee shops with free wifi to keep me busy.  Firstly I had created and downloaded my custom NileGuide for Amsterdam complete with all the sights I wanted to visit.  Secondly I downloaded and installed my WorldNomads Dutch guide to help me ask simple questions like “Where is the Toilet, Please”.  Trust me, this is essential in any city, not to mention that fact that you should always carry change to pay the toilet attendent.  Everything else I needed, I could do with Google Maps.  We are not very far away from a mobile travel guide that includes a maps implementation for real time directions and location based services.  Now, if only we can convince the mobile carriers to reduce their data charges.

6. Closed technologies may be evolutionary, but open technologies are revolutionary.

The example I saw of this simple concept was Google Maps.  While both Microsoft and Mapquest have had mapping technologies for some time, the proliferation of applications using both these platforms has been limited to companies who can afford to license them.  The release of the Google Maps API has been revolutionary in that it has resulted in the massive adoption of mapping applications and the creation of geographically encoded data. The real revolution is the second part because now, every individual has the ability to geocode a variety of objects including photos, videos, products, and even people.

7. The future is about mash-ups.

There is no point trying to create an all in one website that does everything for everyone.  At the end of the day, any attempt to do so will result in a site that does nothing for anyone.  There are so many technologies out there that are very good at what they do that have XML or other APIs that can be integrated into a website.  Let’s not waste time, energy, or money re-inventing analytics, mapping, or even booking engines in order to extend functionality.  Look no further then a site like ProgrammableWeb to discover a world of APIs at your finger tips.

8. Look to other industries for best practices.

The travel industry is NOT unique.  As much as many of its practitioners would like us to believe, there are lessons to be learned from other industries that can be applied to the travel industry.  Accounting practices, business operations, and management are cross compatible and we should be looking to e-commerce and retail for guidance on best practices.  How are other industries handling on-line transactions? How do other industries deal with on-line payment? These are all questions that we should be asking but currently don’t.

9. The travel industry must focus on the customer.

Anna Pollock made a very good comment during the closing discussion that we, as an industry, need to focus on the experience of the customer rather than pinching every penny out of their pocket book.  Case in point: I stayed at the Qbic Hotel at the WTC (about 5 minutes away from the RAI Conference Centre).  It was the cheapest but still business travel focused hotel I could find with close proximity to the venue.  I was very impressed with the service and the quality of the rooms, why? Because as a business traveler it met all my needs without the added fluff.  Believe it or not, there was no phone in the room, but free WIFI throughout the hotel (so I could use Skype).  This is an example of a hotel focusing on the customer’s specific basic needs rather then trying to provide services just for the sake of it.  After my visit, I received a nice email from the hotel asking me to rate the hotel… the only hotel I have stayed at in over two years to do so.  Well done.

10. Stop arguing about who owns the customer because no one does.

Let’s get this out now so there is no confusion.  No one owns the customer or the customer data, the customer does.  The sooner we all recognize this and accept it, the sooner we can begin serving the needs of the customer rather than focusing on who owns the most user data for marketing purposes.  As we move to a more interconnected model I think we will begin to see single sign-on technologies like OpenID or even Google ID become more popular with travel sites.  The benefit with a shared profile is that the user information is shared at the customer’s discretion with vendors with whom the customer chooses to patronize and with strict conditions.  The downside, to the industry, is that it will have to be creative in how it markets and serves customers’ needs in the future knowing that access to private information will be much more limited.

1. Increase in mobile travel.
2. Niche travel social networks would sprout.
3. The big three would not go anywhere (in hindsight, not really a prediction).
4. Start of Intelligent Agents (symantic search)
5. Long tail would shift

I would argue that all of these happened in 2008 although perhaps not to the degree that I would have expected.  My predictions for 2009 are based somewhat on the current global issues and reflect a shift to conservative cost savings and revenue focused strategies:

1. Focus on cost saving technologies: All travel companies, regardless of size, will focus on using technologies that reduce their costs and improve the bottom line.  This means technologies that improve distribution and are performance based could become popular as more expensive stand-a-lone technologies suffer.

2. Increased Product segmentation and Ancillary Revenue: This has been a popular subject with airlines for the last couple of years and Sabre recently presented their airline segmentation product at the Travel Innovation Summit at PhoCusWright 2008.  I think we will start to see more product segmentation from other sectors of the travel industry as suppliers find ways to generate revenue that is value-added to the consumer.  This in part will be driven by consumer demand for cheaper travel with a desire to create a-la-carte packages.

3. Focus on Revenue projects: One trend that I think is inevitable in hard times is the decrease in research and development projects and focus on actual revenue generation.  Not that I don’t like the revenue generation projects, but they tend to be tactical in nature.  The benefit however is that a focus on revenue projects will mean more opportunity for R&D in future years when the times change and the companies have more wiggle room.  This doesn’t mean that you cannot do some cool things with revenue projects like integrate third-party booking APIs or make the customer experience better.

4. Mobile & Social will suffer: With the focus on revenue projects will come a shift away from unproven playing grounds like the mobile and social environments.  Although there is potential with both of these spaces, the revenue models have not presented themselves in any compelling way and as such, many companies will be reluctant to invest significant dollars in these two areas.  That said, I wouldn’t expect innovation to decrease.  I would, in fact, expect that developers of these types of applications will be focusing on making their platforms more revenue driven versus simply being “cool”.

5. Technology Consolidation will accelerate: Like the shakeout of 2001-2002 after the evaporation of the first Internet bubble, we can expect to see more technologies consolidate, get purchased, or simply disappear this year.  Companies that have created cool technologies but have no way to monetize them will be scrambling to find revenue opportunities or other ways to make money.  In this kind of economy, the systems that facilitate revenue will be the winners while those that rely on advertising or non-traditional (read unproven) revenue models will suffer.

All in all, I don’t think the coming year is all doom and gloom.  I think that some of the best innovations come out of hard times because companies are forced to focus on innovating on the fundamentals which often get neglected during good times.  Let’s see whether the social network behemoths like Facebook can find a revenue model that actually sticks in 2009.

“Organised by the International Federation for Information Technology and Travel & Tourism (IFITT), ENTER 2008 offers a unique forum for academics, industry and government to present and debate state-of-the-art research and industry case studies on the application of information and communications technologies to tourism and travel.”

There were several trends that emerged as I listened to and engaged in some of the presentations. The trends I identified spanned across all three tracks; industry, research, and destination. This means that the trend was not unique to a specific track but rather had a sector wide influence. These trends are in no particular order:

1. Adoption of mobile travel apps will increase. With the release of the iPhone, Nokia N95, and other multipurpose phones, we will begin to see more technologies developed to enhance the traveler experience through mobile technologies. Location based services and other on-demand systems will become more popular as travelers turn to their mobile devices for directions, recommendations, destination information and more.

2. Niche Social Networks will sprout. Now that Facebook and MySpace have helped to establish the mainstream credibility and effectiveness of social networks, expect to see more niche social networks emerging. We have already seen sites like TravBuddy.com, WAYN, and other emerge in the travel space, but I would suspect that we will begin to see niche networks either emerging on their own or breaking out of these other more mainstream platforms. One example might be a social network for travel suppliers and travel sellers to meet and join trusted groups, create buying relationships, and perhaps even rate and comment on each other.

3. The Big Three will not go anywhere. Don’t expect Sabre, Amadeus, and Travelport to go away any time soon. Pundits have argued the demise of the GDS for years, but they continue to be the force behind much of the new innovation coming of the sector. In one presentation for example, it was revealed that Amadeus spends over €300M a year on R&D. Given the budgets of many travel startups I would predict that it is probably more than all the travel startups in the last year combined.

4. Start of Intelligent Agents. No, I’m not saying that travel agents aren’t intelligent. I’m referring to software agents, specifically to recommendation capabilities. I wouldn’t be surprised if we begin to see applications that can help you pick a destination or activity based on previous buying history or demographic data. Since social networks are so popular and the demographics are so readily available, it would surprise me in the least if we saw these recommender system start showing up on the Facebook platform first.

5. The Long Tail will start to shift. Expect to see more and more the long tail of travel suppliers adopting on-line booking capabilities. The fat end of the tail, represented by the more technologically advanced suppliers, has already adopted the technology and has begun to set the stage for the smaller players. These smaller players, who up until now, have had very few web booking solutions, now have a number of solutions to choose from. Regardless of the technological solution they choose, the important step will be the one they take on-line.

Now imagine a mobile capable social network and booking platform for long tail travel suppliers that provides intelligent recommendations and is funded by a GDS. Now that would be a winner for sure!

“A staggering 94% of agents who were concerned with supplier relationships and 79% of travel agents concerned with profit margins said they already had or were planning to expand their product offerings in order to mitigate those concerns.

Many were including medical, green, cultural and events tourism packages as well as honing their services to the corporate travel segment. “

This is particularly good news for tour operators who are offer unique and interesting destination products and are looking for retail relationships. In addition, the article goes on to quote Don Birch, CEO and President of Abacus International, who said…

“…it is not enough to be just selling a consolidated package of accommodation, air and entertainment tickets.

“Anybody can do that, but to be a travel agent of the future, the key is to differentiate and to grow their businesses these agents must have unique products and a strong brand with multi-channel competency…”

This definitely reinforces my recommendation to agents that they need to focus their attention on their selling unique products with equally unique suppliers and to provide a full service approach to the travel purchasing process by adding value at every step of the cycle.